Austria pushes for deal on VAT

Austria will launch a last-ditch attempt to end the deadlock over reduced rates of Value Added Tax (VAT) for businesses at Tuesday’s (24 January) gathering of finance ministers.

European Voice

1/18/06, 5:00 PM CET

Updated 4/12/14, 12:10 PM CET

EU ambassadors yesterday (18 January) discussed a draft which would prolong reduced rates for labour-intensive services such as construction or domestic help for three to five years and allow other member states to join the scheme if they so wish.

But Germany is still resisting French President Jacques Chirac's demand for a 5.5% VAT rate on restaurant and catering services.

Chirac wants to make headway on the issue with German Chancellor Angela Merkel at an informal Franco-German meeting on the eve of the Ecofin council, which might unblock negotiations.

French construction workers yesterday (18 January) descended on EU embassies in the French capital to protest against the scrapping of the reduced rates on their industry.

The scheme was launched in 2000 as a temporary experiment to boost employment in labour-intensive sectors.

EU finance ministers in January extended the rates for a further month until Tuesday, but if no decision is taken - unanimous approval is needed - then these sectors will effectively have to impose at least the EU minimum VAT rate of 15% overnight.